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America's  Possible  Share 

in  the  Economic  Future 

of  Russia 


By 
A.  J.  SACK 

Director  of  the  Russian  Information  Bureau 
in  the  United  States 


PUBLISHED  BY  THE 

Russian  Information  Bureau  in  the  U.  S. 

WOOLWORTH  BUILDING 
NEW  YORK  CITY 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

Microsoft  Corporation 


http://www.archive.org/details/americaspossibleOOsackrich 


America's  Possible  Share 

in  the  Economic  Future 

of  Russia 


By 
A.  J.  SACK 


Director  of  the  Russian  Information  Bureau 
in  the  United  States 


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PUBLISHED   BY  THE 

Russian  Information  Bureau  in  the  U.  S. 

WOOLWORTH     BUILDING 
NEW  YORK  CITY 


Copyright,  1919. 

Russian  Information  Bureau 

New  York 


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Foreword 

The  signing  of  the  armistice  and  the  prospect  of  durable 
peace  in  the  very  near  future  have  somewhat  revived  interest 
in  Russia  and  in  the  Russian  market  among  American  busi- 
ness-men. In  response  to  this  interest  displayed  by  individual 
business-men  as-  well  as  by  various  trade-industrial  organi- 
zations, I  am  issuing  this  pamphlet  devoted  to  the  possibilities 
for  American-Russian  commercial  and  financial  cooperation. 
The  pamphlet  contains  the  essentials  of  my  two  pamphlets, 
"Commercial  Russia"  and  "The  Russian  Market,  its  Possi- 
bilities and  Problems,"  issued  by  the  American-Russian 
Chamber  of  Commerce  during  1916,  and  also  of  an  article  of 
mine  published  several  months  ago  in  the  "Daily  Standard 
Statistics  Service." 

Although  the  prospect  of  peace  has,  as  I  have  said  before, 
revived  interest  in  Russia  among  individual  American  busi- 
ness-men and  various  trade-industrial  organizations,  this  in- 
terest is  still  insufficient  considering  the  importance  of  the 
possible  American-Russian  trade  and  financial  cooperation 
from  the  point  of  view  of  the  benefit  of  both  countries* 

Bolshevism,  with  its  wild  experiments  in  Russia's  political, 
cultural  and  economic  life,  with  all  the  misfortune  and 
destruction  it  has  brought  Russia,  naturally  scares  and  dis- 
appoints many  who  were  previously  sincerely  interested  in 
Russia.  ;VThis  disappointment  should  not  becloud  the  proper 
pc-rspective  necessary  for  an  understanding  of  the  Russian 
problem  as  it  stands  to-day.  Great  is  the  destruction  brought 
upon  Russia  by  the  plague  of  Bolshevism,  great  and  bloody 
are  the  sacrifices  borne  by  the  present  Russian  generation. 
But,  from  the  point  of  view  of  Russia's  national  existence  all 
her  present  misfortunes,  inevitable  in  a  period  of  transition  to 
a  higher  form  of  State  organization,  are  insignificant  and  will 
pass  in  a  short  time.  Russia  is  not  an  old  man  dying  from 
exhaustion ;  she  is  a  child  painfully  hurt  in  an  endeavor  to  walk 
independently  for  the  first  time  in  her  life. 


a  r\  r\  /"» 


Russia Vpresent  ^sitttcttiah  is  pitiful,  but  pitiful  has  been 
the  situation  of  every  country  during  great  Revolutions.  Ten 
years  will  pass, — everyone  who  knows  Russia  will  agree  with 
me, — and  the  world  will  see  Russia  an  orderly  democracy, 
Oucfe  S~3»n  united  and  powerful.  Mare  than  this,  she  will  be 
powerful  and  prosperous  as  never  before.  The  creation  of  new 
Slavonic  States  means  the  creation  of  new,  powerful  bodies 
with  natural  cultural  leanings  towards  Russia  as  the  greatest 
Slavonic  nation.  It  is  possible  that  the  time  for  Alliances  has 
passed  and  a  League  of  Nations,  in  one  form  or  another,  will 
come  as  the  result  of  the  World's  War.  In  any  event,  the  voice 
of  Russia,  supported  by  the  new  Slavonic  bodies,  will  before 
long  sound  powerfully  throughout  the  world. 

On  the  other  hand,  one  of  the  most  significant  results  of  this 
War  will  be  the  material  reconstruction  of  Eufbpe.  This  recon- 
struction will  take  place  not  only  because  there  are  many  regions 
throughout  Europe  where  the  hurricane  of  the  War  has  destroyed 
everything,  but  also  because  there  are  and  there  will  be  strong 
movements  among  the  masses  of  the  European  peoples,  demand- 
ing better  living  conditions.  The  democratic  governments  of 
Europe  have  already  acknowledged  these  movements  and  will 
have  to  acknowledge  them  further. 

The  material  reconstruction  of  Europe  on  the  necessary  scale 
is  possible  only  through  two  factors :  the  participation  of 
American  capital  in  European  industrial  life  and  the  develop- 
ment of  Russia's  enormous  natural  resources  and  man-power, 
/just  as  the  political  resurrection  of  Russia  is  the  key  to  the 
solution  of  the  entire  European  political  problem, — without 
peace  in  Russia  there  never  can  be  peace  in  Europe, — so  the 
economic  resurrection  of  Russia  is  to  a  great  extent  the  key  to 
the  solution  of  the  economic  problem  of  Europe. 

Russia  will  come  to  her  feet,  and  probably  sooner  than  many 
expect,  because  upon  her  resurrection  depends  the  happiness  of 
Europe  and  very  likely  of  the  entire  world.  Those  who  thought 
about  and  believed  in  the  great  possibilities  for  political,  eco- 
nomic and  financial  cooperation  between  the  democracy  of  the 
United  States  and  the  young  democracy  of  Russia  have  no  rea- 
son to  feel  disappointed  because  of  Russia  's  temporary  mis- 
fortunes. She  will  arise  as  a  strong  State  and  will  arise  soon. 
This  is  as  certain  as  the  rising  of  the  sun  every  morning. 


America's  Possible  Share 
in  the  Economic  Future  of  Russia 


11  WO  years  ago,  after  the  Revolution  of  March,  1917,  the 
American  people  were  very  enthusiastic  about  Russia, 
and  every  American  business  man  had  faith  in  Russia 
and  believed  in  the  possibilities  for  commercial  and  financial 
cooperation  between  the  two  democratic  nations.  To-day 
many  are  discouraged.  The  present  situation  makes  them  lose 
the  necessary  perspective  in  their  judgment  about  Russia. 

The  extreme  optimism  of  two  years  ago  and  the  extreme  pessi- 
mism of  to-day  are  equally  ungrounded.  The  rule  of  the  Bol- 
sheviki  cannot  but  be  temporary.  This  faction  with  its  naive 
political  and  economic  experiments  will  disappear  as  soon  as 
the  instinct  for  self-preservation  reasserts  itself  in  Russia,  as 
soon  as  Russia  begins  to  recover  from  her  grave  wounds. 
Young,  full  of  latent  power,  she  is  passing  through  a  period 
of  utmost  disorganization  known  to  every  country  that  has 
passed  from  tyranny  to  free,  democratic  development.  With 
the  disappearance  of  the  Bolsheviki,  transportation  will  be  re- 
established, the  banks  will  be  reopened,  the  financial  system 
will  recuperate,  the  management  of  industries  will  be  placed 
in  the  skilled  hands  of  the  industrial  class.  All  this  is  bound 
to  occur  as  soon  as  the  nation,  coming  out  of  its  crisis,  will 
bring  into  existence  a  stable,  democratic  government  com- 
posed of  the  best  representatives  of  Russia's  mind  and  states- 
manship. 

The  "Socialism"  proclaimed  by  the  Bolsheviki — all  respon- 
sible Socialist  leaders  repudiate  such  kind  of  Socialism — has 
resulted  in  the  utmost  disorganization  of  industry,  transpor- 
tation, finance,  and  has  created  a  situation  in  which  entire 
provinces  are  suffering  from  real,  physical  hunger.  A  country 
like  Russia,  with  undeveloped  resources,  with  the  masses  un- 
educated, must  inevitably  pass  through  a  stage  of  capitalistic 


America's  Possible  Share  in  the 


development,  which  alone  is  able  to  organize  the  resources  of 
the  nation,  to  build  up  the  industries  and  to  bring  them  to  the 
proper  stage  of  efficiency. 

This  brings  us  to  the  economic  programme  of  the  First 
Provisional  Government,  a  programme  to  which  every  future 
democratic  government  in  Russia  will  have  to  turn.  Russia's 
economic  future  lies  in  the  development  of  her  natural  re- 
sources and  for  this,  first  of  all,  foreign  capital  is  needed.  This 
in  turn  necessitates  the  reestablishment  of  Russia's  credit  in 
the  foreign  markets,  and  the  Bolsheviki's  repudiation  of 
Russia's  national  debt  is  therefore  only  child's  play  which  will 
be  obliterated  as  soon  as  their  tyranny  is  overthrown.  Every 
future  Russian  democratic  government  will  have  to  begin  with 
acknowledgement  of  the  Russian  debt  and  honest  payment  of 
the  interest  and  principal. 

The  possibilities  for  Russia's  industrial  development  may  be 
best  illustrated  by  this  country's  striking  development,  even 
under  the  bureaucratic  regime,  during  the  ten  year's  preceding 
the  present  war.  During  this  period  Russia's  national  wealth 
had  almost  doubled.  Before  the  Russo-Japanese  War,  in  1901, 
Russia  produced  16,750,000  tons  of  coal.  Ten  years  later,  in 
1911,  Russia  yielded  31,116,667  tons  of  coal,  about  86  per  cent, 
more  than  in  1901.  Just  before  the  present  war  Russia  was 
producing  more  than  40,000,000  tons  annually.  The  amount 
of  copper  smelted  in  Russia  in  1901  was  only  9,633  tons.  In 
1911  this  amount  had  increased  to  26,060  tons.  Just  prior  to 
the  war  it  totaled  about  40,000  tons.  The  progress  in  copper 
production  is  analogous  with  the  development  in  all  the  me- 
tallic industries  in  Russia.  The  quantity  of  pig  iron  produced 
was  almost  doubled  during  the  last  three  years,  reaching  an 
amount  more  than  5,000,000  tons  just  before  the  war. 

Agricultural  production  in  Russia  developed  along  the  same 
lines.  In  1901  an  area  of  214,500,000  acres  was  sowed  in  main 
agricultural  products,  whereas  in  1910-11  the  number  of  acres 
planted  was  246,000,000.  The  yield  in  1901  was  54,167,000 
tons,  and  in  1910-11  it  amounted  to  74,168,000  tons. 

Naturally,  with  the  development  of  Russia's  industries  Rus- 
sia's trade  developed  also.    The  number  of  Russian  commercial 


Economic  Future  of  Russia 


houses  increased  from  862,000  in  1901  to  1,177,000  in  1911. 
Just  preceding  the  war  the  number  of  commercial  houses 
totaled  about  1,500,000. 

The  joint-stock  company  is  a  very  important  feature  of  Rus- 
sia's industrial  development.  Many  Russian  manufacturing 
establishments  are  organized  in  the  form  of  joint-stock  com- 
panies. During  the  five  years  1903-7,  419  joint-stock  companies 
began  operating  in  Russia,  with  a  capital  of  $180,540,000. 
During  the  following  five  years,  1907-11,  778  joint-stock  com- 
panies were  operating,  with  a  capital  of  $453,900,000.  Just 
prior  to  the  war,  in  1913,  235  new  joint-stock  companies  were 
organized,  with  a  capital  of  about  $204,000,000.  The  capital 
of  the  joint-stock  companies  has  increased  about  half  a  billion 
dollars  since  1911,  reaching  a  total  of  $2,022,150,000  before  the 
war.    Of  this  $299,370,000  was  foreign  capital. 

Simultaneously  with  the  striking  economic  and  commercial 
development  in  Russia  developed  also  the  finance  of  the  vast 
country.  The  money  in  Russian  banks  and  in  circulation  mul- 
tiplied from  $918,000,000  to  $1,938,000,000  during  the  last  ten 
years,  an  increase  of  about  111  per  cent.  The  amount  of 
securities  in  circulation  grew  from  $4,233,000,000  to  $6,783,- 
000,000,  an  increase  of  about  60  per  cent.  The  deposits  in  the 
Russian  State  Bank,  Societies  for  Mutual  Credit,  Commercial 
banks  and  city  banks  on  January  1,  1913,  amounted  to  $1,669,- 
230,000,  about  $1,000,000,000  more  than  on  January  1,  1903. 
The  deposits  in  the  Russian  savings  banks  multiplied  from 
$399,840,000  in  1903  to  $812,940,000  in  1913.  During  the  ten 
years  between  the  Russo-Japanese  and  the  present  war  Rus- 
sia's wealth  had  doubled. 

The  giant  whose  name  is  Russia  developed  remarkably  in 
spite  of  the  chains  holding  him  down.  The  Revolution  natur- 
ally brought  about  a  state  of  temporary  disorganization.  But, 
there  is  not  a  power  in  the  world  able  to  crush  the  new  spirit 
in  the  country,  and  this  spirit,  after  adjusting  itself,  will 
produce  stable,  democratic  institutions  and  will  open  the 
brightest  pages  in  Russia's  national  history. 

Russia's  present  economic  situation  is  analagous  with  the  situ- 
ation of  the  United  States  after  the  Civil  War  and  the  future 


8  America  s  Possible  Share  in  the 

economic  development  of  Russia  will  be  similar  to  the  eco- 
nomic development  of  this  country.  Four  elements  com- 
bined made  possible  the  development  of  the  United  States. 
The  first  element  was  its  youth,  energetic  and  eager  for  work. 
The  second  was  the  natural  resources  of  the  country.  The 
third,  the  sacred  principles  of  democracy,  which  recognize  for 
everybody  a  certain  amount  of  right  and  give  everybody  his 
chance.  The  fourth  was  the  foreign  capital  which  flowed  into 
the  United  States  after  the  Civil  War,  and,  with  the  work  of 
the  free  democracy,  made  possible  the  development  of  its 
natural  resources. 

Two  of  these  elements  we  Russians  have  always  possessed. 
I  take  the  liberty  to  say  that  we  have  always  possessed  a 
talented  people,  a  people  with  great  latent  power;  a  people 
which,  under  the  strain  of  the  most  unfortunate  national  his- 
tory, produced  a  wonderful  culture.  On  the  other  hand,  we 
possess  almost  endless  and  priceless  natural  resources.  Two 
years  ago  the  third  element  was  born — Democracy,  with  its 
creative  spirit.  There  is  always  trouble  in  the  beginning  of  the 
life  of  every  Democracy,  but  in  the  long  run  it  is  a  blessing  for  a 
country.  It  has  been  a  blessing  for  the  United  States.  It  will 
prove  a  blessing  for  Russia. 

As  soon  as  democratic  Russia  finds  herself — and  she  will  find 
herself  before  long — she  will  need  foreign  capital  for  her 
development  just  as  the  United  States  needed  it  half  a  century 
ago.  First  of  all  Russia  must  develop  her  railroads.  It  is 
calculated  in  Russian  economic  literature  that  after  the  war 
Russia  will  have  to  build  annually  not  less  than  10,000  kilo- 
meters of  railroad.  The  insufficiency  of  the  existing  railroad 
system  in  Russia  can  very  well  be  seen  by  comparing  the 
situation  in  Russia  with  that  in  this  country.  The  United 
States  in  1910  had  258,782  miles  of  railroad,  whereas  Russia, 
covering  one-seventh  of  the  total  area  of  the  globe  and  beiag 
about  three  times  the  size  of  the  United  States,  had  only 
39,706  miles  of  railroad.  At  a  time  when  the  United  States 
provided  29  miles  of  railroad  for  every  10,000  of  population, 
Russia  was  only  providing  3.2  miles  for  the  same  number  of 
population. 


Economic  Future  of  Russia 


The  following  table  compares  the  railroad  situation  in  Rus- 
sia not  only  with  that  of  the  United  States,  but  also  with  the 
principal  countries  of  Europe  : 

The  Length  of  the  For 

Railroad  System  To  Each  Every  10,000 

(in  miles)  100  Sq.  Miles      of  Population 

United  States  258,782  1,9  29.0 

All   Europe  225,898  1.5  5.0 

France  32,924  4.1  8.4 

Germany 40,766  5.0  6.2 

Austria-Hungary  29,582  2.9  5.8 

Great  Britain  _ 25,053  5.3  5.6 

Italy  11,304  2.6  32 

Russia  39,706  0.5  3.2 

Russia  now  holds  the  last  place*,  and  the  development  of  the 
railroad  system  in  Russia  is  the  preliminary  condition  for  the 
industrial  development  of  the  country. 

Being  a  preliminary  condition  for  all  industrial  development, 
the  building  of  railroads  in  itself  presupposes  industrial  de- 
velopment. After  the  war  Russia  must  build  and  undoubtedly 
will  build  not  less  than  10,000  kilometers  of  railroad  every 
year.  The  "Torgovo-Promyshlennaya  Gazetta,"  the  official 
organ  of  the  Russian  Ministry  of  Finance,  in  the  issue  of  April 
5,  1916,  calculated  that  for  building  these  railroads  more  than 
double  the  amount  of  rails  and  other  metals  which  Russia 
can  produce  will  be  needed.  It  is  essential,  therefore,  that 
there  should  be  an  immediate  development  in  the  metallic 
industries  in  Russia  as  soon  as  her  economic  life  is  reestablished. 

Up  to  the  present  time  the  Ural  Mountains  have  been  one 
of  the  chief  sources  of  Russia's  metallic  supply,  and  there  are 
vast  deposits  in  the  Ural  Mountains.  In  order  to  develop 
mining  in  the  Ural  Mountains  to  a  greater  degree  it  is  neces- 
sary to  secure  additional  quantities  of  coal,  as  there  is  no  coal 
in  the  Ural  Mountains.  This  coal  must  be  brought  from 
Western  Siberia,  and  the  problem  of  securing  the  proper  coal 
supply  is  one  of  the  difficulties  connected  with  the  industrial 
development  in  Russia. 

This  problem  will  be  largely  solved  by  the  development  of 
the  "Kusnetsky  Basseyn,"  a  part  of  the  immensely  rich  Altay 
region. 

Until  lately  the  Altay  region  has  been  practically  unknown, 
even  in  Russia.    There  had  been  a  small  mining  development 


10  America  s  Possible  Share  in  the 

in  this  region  during  the  second  half  of  the  Eighteenth  Century, 
and  fairly  large  quantities  of  gold,  silver  and  copper  had  been 
produced,  but  on  account  of  the  insufficient  means  of  trans- 
portation mining  in  this  region  ceased,  and  it  is  only  during 
recent  years,  with  the  beginning  of  railroad  building  in  the 
Altay,  that  the  immense  quantities  of  its  natural  wealth  have 
been  opened  for  the  country. 

A.  I.  Konovalov,  Minister  of  Trade  and  Industry  in  the 
Provisional  Government,  addressing  the  Moscow  Stock  Ex- 
change on  April  14,  1917,  stated  that  the  Russian  budget  after 
the  war  will  amount  to  not  less  than  8-9  billion  rubles,  and 
it  is  impossible  to  cover  such  a  budget  by  means  of  increased 
taxation.  "The  extent  of  taxation  is  limited  by  the  country's 
productivity,"  said  A.  I.  Konovalov,  "and  its  increase  is  possi- 
ble only  in  proportion  to  the  increased  value  of  the  total  pro- 
duction of  the  country's  industries.  The  imperative  demand 
for  the  development  of  our  industries  has  compelled  the  Min- 
istry of  Trade  and  Industry  to  start  searching  for  new  sources 
of  wealth  in  the  country,  for  the  purpose  of  developing  them  at 
the  earliest  possible  moment.  In  this  connection  the  Ministry 
has,  in  the  first  place,  turned  to  the  undeveloped  riches  of  the 
North.  Our  Ministry  has  appointed  a  special  committee  for 
the  purpose  of  studying  the  natural  resources  of  our  northern 
provinces,  in  order  to  develop  their  economic  life  in  general, 
and  above  all  to  increase  our  lumber  export." 

This  especial  mentioning  of  the  necessity  for  increasing  Rus- 
sia's lumber  export  is  very  significant.  The  development  of  Rus- 
sia's timber  industry  means  for  Russia  practically  the  solution  of 
a  very  considerable  part  of  her  financial  difficulties.  Siberia  con- 
tains half  the  forests  of  Asia.  The  amount  of  timber  in  the  Amur 
region  and  in  the  Maritime  Province  alone  is  estimated  at  509,000,- 
000  acres.  In  exporting  timber,  Russia  can  take,  and  we  are  cer- 
tain will  take,  the  leading  place  in  the  world's  markets. 
While,  during  the  nineteenth  century,  the  total  amount  of 
Russia's  exports  multiplied  twenty-one  times,  the  timber  export 
multiplied  one  hundred  and  twenty-six  times.  It  is  interesting 
to  observe  that  during  the  same  period  Russia's  grain  export 
multiplied  only  forty-four  times. 


Economic  Future  cj  Russia  11 

In  1913  Russia  exported  timber  materials  to  the  amount  of 
$84,099,000.  But  this  amount  is  negligible  compared  to  the 
possible  export  of  timber.  In  exporting  grain  Russia  meets 
the  competition  of  the  United  States,  Argentina,  Canada,  the 
East  Indies,  Australia,  Bulgaria  and  Roumania.  But  in  ex- 
porting timber  Russia  certainly  can  take  and  is  going  to  take 
the  leading  place  in  the  world's  market.  If  we  take  the  coun- 
tries which  have  not  sufficient  timber  in  one  group  and  the 
countries  which  are  able  to  export  in  another  group,  we  have 
the  following  table : 

I.  II. 

The  Amount  of  Timber-Land  The  Amount  of  Timber-Land 

(In  Acres)  (In  Acres) 

Germany  38,430,000      Russia    1,125,000,000 

Balkan  States  28,380,000      Canada  - 889,380,000 

France      (without     col-  United  States  603,000,000 

onies)    27,141,000      Sweden  and   Norway...       81,000,000 

Spain  (without  colonies)  17,844,000      Austria-Hungary-^. 63,000,000 

Italy  (without  colonies)  11,256,000 

Great    Britain    (without 

colonies)    3,375,000 

Other    European    coun- 
tries   :. 6,426,000 


Total  - 132,852,000         Total  2,701,380,000 

This  table  shows  that  timber  is  needed  in  all  the  European 
countries,  exclusive  of  Russia,  Scandinavia  and  Austria- 
Hungary.  The  import  into  Europe  from  the  United  States  is 
comparatively  small.  Canada,  perhaps  in  the  near  future, 
may  become  a  great  exporter  of  timber,  but  most  of  this 
timber  will  go  to  the  South  American  countries.  Russia's 
chief  competitors  in  the  European  timber  market  will  be  Scan- 
dinavia and  the  countries  originally  composing  Austria-Hungary. 
But  the  export  from  these  countries  has  been  diminishing  during 
the  last  years.  Scandinavia  showed  a  tendency  to  increase  the  ex- 
port of  paper.  As  for  Austria-Hungary,  for  the  last  years  her 
competition  with  Russian  timber  has  also  become  weaker  and 
weaker.  During  the  peripd  1906-1910  Russia  exported  to  Ger- 
many 48.8%  of  all  timber  imported  by  the  latter  country.  Aus- 
tria-Hungary held  second  place,  having  exported  to  Germany 
31.4%.  Since  then,  for  the  last  three  years  before  the  war. 
Russia's  export  to  Germany  increased  to  50%  of  the  entire 
amount  of  timber  imported  by  the  latter.     During  the  same 


12  America  s  Possible  Share  in  the 

time  Austria-Hungary's  export  to  Germany  diminished  and 
became  only  one-half  of  the  amount  Germany  imported  from 
Russia. 

The  report  of  the  Russian  Consul  in  London,  published  three 
years  ago,  shows  very  clearly  how  wonderfully  Russia  ad- 
vanced in  the  European  timber  markets  during  the  past  years. 
Until  lately  70-75%  of  Russia's  entire  timber  export  went  to 
Germany  and  England.  During  the  last  years  it  went  to 
England  more  than  to  Germany.  The  per  cent  of  timber  im- 
ported in  England  from  Russia,  Scandinavia  and  the  United 
States  during  the  ten  years  before  the  war  shows  how  success- 
ful was  Russia's  export  for  this  period. 

Imported  in  England. 

1903    1907    1909    1911    1913 

Russian   timber   29%      37%      46%      47%      51% 

Scandinavian  timber  23%      32%      25%      25%      25% 

United  States  timber 33%      28%      27%      26%      22% 

Withal,  until  now  Russia  has  not  really  utilized  her  wonder- 
ful timber  resources.  If  we  compare  the  export  of  timber  in 
1913  from  Russia,  the  United  States,  Scandinavia  and  Austria- 
Hungary,  with  the  amount  of  timber  land  in  these  countries, 
we  see  that  Russia,  while  richer  in  timber  land,  is  behind  the 
other  nations  in  the  amount  of  foreign  trade  in  timber. 

The  Amount  The  Export 

of  Timberland  of  Timber 

(In  Acres)  (In  Dollars) 

Russia 1,125,000,000  89,250,000 

United  States  - 603,000,000  134,487,000 

Scandinavia  81,000,000  129,489,000 

Austria-Hungary  63,000,000  79,203,000 

There  is  no  doubt  that  after  the  war  all  the  belligerent 
countries  will  need  large  quantities  of  timber.  The  need  of 
timber  in  the  European  market  will  open  wonderful  prospects 
for  the  Russian  timber  industry.  By  proper  development  of 
this  industry,  Russia  will  be  able  to  deliver  the  bulk  of  the 
timber  necessary  for  the  European  countries.  It  is  very  pos- 
sible that  in  this  line  Russia  will  not  meet  serious  competition 
either  from  Scandinavia  or  from  the  New  World.  As  for 
Austria-Hungary,  she  will  have  her  own  needs,  and  aside  from 
this,  a  great  part  of  her  rich  timberlands  in  Galicia  has  been 
destroyed  during  the  war. 


Economic  Future  of  Russia  13 

The  development  of  Russia's  timber  industry  and  the  export 
of.  Russian  timber  to  the  European  market  means  for  Russia 
the  practical  solution  of  a  very  considerable  part  of  her  finan- 
cial difficulties,  the  heritage  of  the  war.  The  development  of 
the  timber  industry  will  create  a  favorable  foreign  trade  bal- 
ance and  will  assist  in  the  payment  of  the  national  debt. 

The  conclusion  is  evident.  All  of  Russia's  industries,  the 
railroads,  the  metallic  industries,  coal,  timber,  must  be 
developed  immediately  after  peace  is  established.  That  is 
Russia's  national  task. 

For  the  development  of  all  of  Russia's  industries,  above  all, 
foreign  capital  will  be  needed.  Before  the  war  French, 
English,  Belgian  and  German  capital  was  invested  in  Russia. 
But  now,  after  the  war,  these  capitals  will  find  enough  work 
in  their  own  countries. 

Russia's  e^es  will  turn  to  the  United  States.  The  United 
States  is  industrially  so  developed  because  the  natural  re- 
sources of  the  country  for  the  last  fifty  years  have  been  united 
with  the  creating  power  of  foreign  capital.  As  soon  as  normal 
conditions  are  reestablished  it  will  be  Russia's  turn.  During 
the  war  the  United  States,  from  a  nation-debtor,  has  become  a 
nation-creditor.  It  will  be  of  benefit  to  both  countries  if  Amer- 
ican capital  will  take  the  same  part  in  Russia's  industrial  de- 
velopment that  foreign  capital  once  took  in  the  development  of 
this  country. 

At  this  moment  practically  all  business  relations  between 
the  United  States  and  Russia  are  at  a  standstill.  This 
should  not  discourage  American  business  interests.  The 
American  financial  interests  must  prepare  for  financing 
Russia's  industries,  the  American  trade  interests  must  prepare 
for  future  trade  with  Russia.  The  time  will  come — and  it 
may  come  very  suddenly — when  everyone  who  is  prepared 
will  be  richly  rewarded.  Those  unprepared  will  be  punished 
for  their  short-sightedness. 


14  America's  Possible  Share  in  the 

II 

Two  things  are  essential  for  everyone  interested  in  the  Rus- 
sian market.  First,  everyone  must  know  his  field  and  have  a 
system  of  connections  in  this  field;  second,  everyone  must 
know  the  psychology  of  the  Russian  business  man  and  have 
a  clear  idea  of  the  best  methods  of  approaching  him. 

The  history  of  American-Russian  trade  relations,  before  the 
war,  shows  best  what  part  in  Russia's  foreign  trade  can  be 
covered  by  American  activity.  A  study  of  the  German 
methods  in  trade  with  Russia  gives  the  best  understanding 
as  to  how  to  successfully  approach  the  Russian  business  man. 
The  present  war  has  created  many  changes  in  the  prospects 
for  the  development  of  a  close  economic  cooperation  between 
Russia  and  the  United  States,  but  prior  to  the  war  there  was 
strong  evidence  showing  the  tendency  towards  economic  co- 
operation between  Russia  and  the  United  States.  The  changes 
effected  by  the  present  war  are  therefore  only  an  emphasized 
continuation  of  the  natural  tendency  towards  an  American- 
Russian  economic  rapprochement. 

In  Russian  official  statistics  trade  with  the  United  States 
began  to  be  registered  in  1846.  Until  that  time,  beginning 
from  1827,  no  special  place  was  devoted  to  Russian  trade  with 
the  United  States.  There  was  a  chapter  devoted  to  Russian 
trade  with  "America,"  which  included  all  the  American  coun- 
tries taken  together. 

The  most  interesting  figures  in  the  Russian  official  statistics 
relating  to  trade  with  the  United  States  may  be  represented 
in  the  following  table: 

Yearly  Average  in  Millions  of  Dollars* 


— Russia's  Import —  — Russia's  Export — 

Total  Import  Total  Export 

Years—  Import         from  U.  S.  Export  to  U.  S. 


1878-1890 243.39  15.5  297.22  0.4 

1891-1900 273.77  22.0  336.95  1.3 

1901-1910 393.27  28.3  547.2i  3.0 

1911-1913 616.83  42.3  761.51  7.4 

*These  figures  are  based  on  the  normal  exchange  for  the  ruble,  51c. 

This  table  shows  that  during  the  entire  period  the  United 
States'  export  to  Russia  was  greater  than  Russia's  export  to 
the    United    States.      Nevertheless,    Russia's    export   to    the 


Economic  Future  of  Russia  15 

United  States  during  the  past  years  has  developed  remarkably. 
Russia's  export  during  the  period  1901-1910  averaged  547.21 
million  dollars  as  compared  with  297.22  million  dollars  for  the 
period  1878-1890,  an  increase  of  about  84%.  At  the  same  time 
it  shows  that  Russia's  export  to  the  United  States  increased 
from  0.4  million  dollars  average  during  the  period  1878-1890 
to  3.0  million  dollars  average  for  the  years  1901-1910,  an 
increase  of  about  650  per  cent.  Comparing  data  for  the  period 
1911-1913  we  find  that  Russia's  export  in  general  increased 
from  547.21  million  dollars  to  761.51  million  dollars,  about 
39  per  cent.  During  the  same  time  Russia's  export  to  the 
United  States  increased  from  3.0  million  to  7.4  million  dollars, 
about  113  per  cent. 

The  statistics  relating  to  Russia's  export  to  the  United 
States  are  still  more  remarkable,  according  to  the  United 
States  reports. 

The  most  interesting  figures  of  the  United  States  statistics 
relating  to  trade  with  Russia  may  be  represented  in  the 
fallowing  table,  corresponding  to  the  table  given  before: 

Yearly  Average  in  Millions  of  Dollars* 

United  States  Export  United  States  Import 

Total  Export  Total  Import 

Years —  Export  to  Russia  Import       from  Russia 

1878-1890.- 757.1  11.9  636.3  2.6 

1891-1900 1,024.9  7.5  763.3  4.7 

1901-1910 „  1,616.2  16.7  1,158.5  11.9 

1911-1913 2,325.3  25.4  1,714.5  21.1 

The  United  States  statistical  reports,  just  as  the  Russian 
reports,  show  the  increase  in  Russia's  export  to  the  United 
States.  It  has  been  shown  that  Russia's  export  to  the  United 
States  during  the  period  beginning  with  1878  increased  faster 
than  Russia's  export  in  general.  Now,  on  the  other  hand, 
we  see  that  the  United  States'  import  from  Russia  increased 
more  rapidly  than  the  United  States'  import  in  general. 
During  the  period  1878-1890  the  United  States'  import  from 
Russia  amounted  to  only  0.4  per  cent,  of  the  United  States' 
total  import.  During  the  period  1891-1900  it  amounted  to 
0.6  per  cent.  During  the  period  1900-1910  it  had  increased 
to  1  per  cent.,  and  for  the  period  1911-1913,  1.23  per  cent. 


16  Americas  Possible  Share  in  the 

Comparing  Russia's  export  to  the  United  States  as  shown 
by  Russian  and  American  statistics,  the  following  table  is 
obtained : 

Yearly  Average  in  Millions  of  Dollars* 

%  Russia's  Export  Russia's  Export 

to  U.  S.  According        to  U.  S.  According 
Years —  to  Russia's  Statistics        to  U.  S.  Statistics 

1878-1890. _  0.4  2.6 

1891-1900 „ _  1.3  4.7 

1901-1910.... „.. 3.0  11.9 

1911-1913 7.4  21.1 

As  a  general  rule,  in  cases  of  such  discrepancy,  preference 
should  be  given  to  the  statistics  of  the  country  to  which  the 
goods  are  brought.  Accordingly,  the  quantity  of  goods 
brought  to  the  United  States  from  Russia  was  about  three 
times  as  great  as  that  shown  in  the  Russian  official  reports. 
This  difference  cannot  be  explained  by  saying  that  the  United 
State's  set  an  estimate  higher  than  that  placed  upon  the  goods 
in  the  Russian  port.  According  to  Section  19  of  the  Customs' 
Administrative  Act  of  June  10,  1890,  the  United  States  esti- 
mate must  be  the  same  as  the  estimate  set  in  the  original 
port  and  only  the  cost  of  packing  and  loading  is  to  be  added 
to  the  original  price. 

"A  great  part  of  our  export  to  the  United  States,"  says  the 
report  of  the  Russian  Ministry  of  Finance,  especially  devoted 
to  American  trade,  "appears  in  Russian  statistics  as  export  to 
other  countries.  Direct  shipping  connections  between  Russia 
and  the  United  States  are  hardly  developed.  Our  goods  are 
reloaded  in  West  European  ports,  and  therefore  in  Russian 
statistics  these  goods  are  registered  as  exported  not  to  the 
United  States,  but  to  Germany,  Holland  and  Great  Britain. 
Germany  has  been  playing  the  great  role  of  middleman  in 
our  export  to  the  United  States."* 

It  is  evident  that  Russia's  export  to  the  United  States  was 
even  greater  than  shown  in  the  United  States  statistical 
reports.  A  considerable  part  of  Russian  goods  coming  to  the 
United  States  by  way  of  Germany  is  registered  in  the  United 
States  Statistics  as  German  goods.     Germany  has  been  accus- 


*In    Russian   official    statistics,    for    instance,    we    have    no    data    relating   to    Russia's 
expor*  gf  furs  to  the  United  States.     This  export  appears  as  export  to  Germany.     At 
the  same  time  in  the  United  States  statistics  we  find  considerable  data  relating  to  the 
import  of   Russian  furs. 


11.9 

15.5 

7.5 

22.0 

167 

28.3 

25.4 

42.3 

Economic  Future  of  Russia  17 

tomed  to  export  to  the  United  States  large  quantities  of  the 
same  goods  that  Russia  exported,  such  goods  as,  for  instance, 
hides,  skins,  seeds,  sugar  beet  seed  and  licorice  root. 

The  United  States'  export  to  Russia  always  has  been  greater 
than   Russia's  export  to   the  United  States.     By  comparing 
the  Russian  and  the  United  States  statistics,  referring  to  the 
United  States'  export,  the  following  table  is  obtained : 
Yearly  Average  in  Millions  of  Dollars* 

U.  S.  Export  U.  S.  Export 

to  Russia  According     to  Russia  According 
Years —  to  U.  S.  Statistics       to  Russian  Statistics 

1878-1890 _ 

1891-1900. - - 

1901-1910. - 

1911-1913 -..._ 

In  this  table  preference  must  be  given  to  the  Russian  statis- 
tics. A  great  part  of  the  goods  en  route  from  the  United 
States  to  Russia  was  frequently  reloaded  in  West  European, 
ports  and  therefore  appeared  in  the  United  States  statistics 
as  export  to  Germany,  Great  Britain  or  Holland.  The  situa- 
tion in  the  exporting  of  cotton  to  Russia  will  serve  to  illustrate 
the  point. 

In  1910  the  United  States  reports  gave  38.89  million  pounds 
as  the  amount  of  cotton  exported  from  the  United  States  to 
Russia.  On  the  other  hand,  Russian  statistics  reported  164.95 
million  pounds.  And  this  does  not  at  all  cover  the  amount  of 
cotton  brought  into  Russia  from  the  United  States.  Allow- 
ance must  still  be  made  for  the  cotton  brought  into  Russia 
from  this  country,  but  which  Russia  registered  as  coming 
from  Great  Britain,  Germany,  Italy  and  Austria-Hungary. 

A  remarkable  conclusion  may  be  drawn  by  now  comparing 
the  United ■  States'  and  Russia's  statistics  dealing  with  the 
United  States'  export  of  all  kinds  of  goods,  excluding  cotton. 
During  the  period  1901-1905,  the  average  export  to  Russia, 
according  to  American  statistics,  was  8.7  million  dollars,  and 
according  to  Russian  statistics,  7.3  million  dollars.  During 
the  period  1905-1910  corresponding  figures  are  13.1  million 
dollars  and  9.3  million  dollars. 

It  is  strange  to  find  Russia  reporting  lower  figures  than 
the  United  States.    It  is  necessary  to  note  that  the  estimate  set 


18  Americas  Possible  Share  in  the 

on  goods  coming  to  Russia  from  the  United  States  covers  in 
Russian  official  statistics  not  only  the  price  of  goods  in  the 
American  port,  but  freight,  insurance,  loading  expenses,  and 
also  frequently  the  profit  of  the  West  European  middleman. 
Therefore  in  1910,  for  instance,  the  average  price  of  United 
States  cotton  imported  in  Russia  was  given  as  14.7  cents  per 
pound  on  this  side,  and  according  to  Russian  official  statistics, 
15.8  cents  per  pound. 

If,  under  such  circumstances,  the  Russian  official  statistics 
report  totals  lower  than  those  given  in  the  United  States 
reports,  then  again  the  conclusion  can  be  drawn  that  a  very 
considerable  part  of  American  trade  with  Russia  was  under- 
taken by  West  European  countries  because  of  the  undeveloped 
direct  connections  with  Russia. 

"The  United  States  is  playing  a  greater  part  in  our  trade," 
says  the  official  report  of  the  Russian  Ministry  of  Finance, 
"than  can  be  seen  in  our  statistical  reports.  The  real  amount 
of  our  trade  with  the  United  States  is  not  obvious,  on  the  one 
hand,  because  of  our  undeveloped  direct  trade  relations,  and, 
on  the  other  hand,  because  of  the  middleman's  part  played 
until  now  by  Germany  and  Great  Britain." 

This  official  Russian  statement  maybe  reversed  to  interpret 
the  American  side  of  the  situation.  Russia^played  in  the 
United  States  trade  a  considerably  larger  part  than  is  shown 
in  the  United  States  statistics.  The  two  countries  had  need 
of  one  another  and  therefore  trade  between  them  developed 
even  under  the  most  adverse  circumstances.  It  is  impossible 
to  say  what  was  the  real  amount  of  American-Russian  trade, 
but  assuredly  considerably  quantities  of  American  goods  were 
successfully  brought  into  Russia. 

Russia  supplied  the  United  States  with  raw  materials, 
almost  exclusively.  In  1910  Russia's  entire  export  to  the 
United  States,  according  to  Russian  statistics,  amounted  to 
4.84  million  dollars.  Of  this,  4.69  million  dollars — about  97 
per  cent — was  raw  materials.  Such  products  as  hides  and 
skins,  wool,  horse  manes,  horse  tails  and  bristles  held  first 
place  among  these  exports.  Russian  statistics  accredit  these 
goods  with  a  yearly  average  of  2.22  million  dollars  for  the 


Economic  Future  of  Russia  19 

period  ^1906-1910  out  of  the  3.82  million  dollars  of  Russia's 
entire  export  to  the  United  States. 

Second  place  must  be  given  to  licorice  root.  It  is  of  interest 
to  observe  that  the  United  States  was  almost  the  sole  market 
for  Russia's  licorice  root.  In  1910,  out  of  the  29.24  million 
pounds  of  Russia's  total  export  of  licorice  root,  27.73  million 
pounds  was  exported  to  the  United  States. 

besides  the  products  mentioned  above,  it  is  necessary  to  call 
attention  to  Russia's  export  of  rubber  waste,  manganese  ore, 
flax  and  hemp.  According  to  United  States  reports,  the  export 
of  these  goods  to  the  United  States  was  greater  than  the  Rus- 
sian statistics  show.  During  the  period  1906-1910  the  United 
States'  import  of  rubber  waste  averaged  4.83  million  pounds, 
according  to  Russian  statistics,  and  6.53  million  pounds,  ac- 
cording to  the  United  States  reports.  As  for  manganese  ore, 
Russia  reported  24.3  million  pounds  and  the  United  States 
reported  30.4  million  pounds.  The  most  noteworthy  difference 
is  found  in  the  statistical  reports  relating  to  Russia's  export 
of  flax  and  hemp.  According  to  the  Russian  statistics,  the 
yearly  average  of  Russia's  flax  exported  to  the  United  States 
during  the  period  1906-1910  amounted  to  481,100  pounds. 
According  to  the  United  States  statistics  it  amounted  to 
6,786,000  pounds,.  The  corresponding  figures  for  hemp  are 
241,800  pounds  in  Russian  statistics,  and  1,624,500  pounds 
according  to  the  United  States  statistics. 

v  According  to  the  statistics  of  both  countries,  therefore, 
during  the  ten  years  previous  to  the  present  war  there  wa§ 
a  remarkable  increase  in  the  exportation  to  the  United  States 
of  Russian  raw  materials,  consisting  chiefly  of  licorice  root, 
hides  and  skins,  furs,  hair  and  bristles,  wool,  hemp,  horses' 
manes,  horses'  tails,  pulp  and  rubber  waste.  The  American 
statistics  show  also  that  a  considerable  amount  of  flax  and 
flax  tow  must  be  added  to  this  list. 

During  the  war,  on  account  of  the  restrictions  placed  by 
the  Russian  Government  on  the  movement  of  Russian  raw 
materials  to  the  United  States,  it  has  been  difficult  to  secure 
a  free  importation  from  Russia  to  this  country.  There  has 
been,  however,  a  very  steady  increase  in  the  demand  for 
Russian  raw  materials  of  all  kinds.     This  is  particularly  true 


20  Americas  Possible  Share  in  the 


of  furs  and  fur  skins,  of  hides  and  skins,  especially  calf  skins 
and  goat  skins,  and  also  of  Russian  seeds.  A  typical  illustra- 
tion is  the  fact  that  prior  to  the  war  'the  United  States 
purchased  most  of  its  sugar  beet  seed  for  planting  purposes 
in  Germany.  Germany,  in  turn,  secured  the  bulk  of  this  seed 
from  Russia.  Since  the  beginning  of  the  war  direct  relation- 
ships have  been  opened  and  the  United  States  has  imported 
large  quantities  of  Russian  sugar  beet  seed.  Careful  estimates 
show  that  there  is  a  market  demand  in  the  United  States  for 
from  60  to  75  million  dollars'  worth  of  Russian  raw  materials, 
which  forms  a  nucleus  for  a  large  reciprocal  trade  from  Amer- 
ica and  to  some  degree  discounts  the  idea  that  the  trade  be- 
tween the  United  States  and  Russia  is  not  supplemental  in 
nature. 

As  for  the  United  States'  export  to  Russia,  there  is  again  a 
great  difference  in  the  Russian  and  the  United  States  statis- 
tics relating  not  only  to  trade  totals,  but  to  individual  articles 
of  trade. 

Cotton  held  first  place  in  the  United  States'  export  to  Russia. 
It  has  been  noted  before  that  the  amount  of  cotton  exported 
to  Russia  by  the  United  States  in  1910,  according  to  statistics 
on  this  side,  was  38.89  million  pounds,  whereas  Russia  reports 
164.95  million  pounds.  And,  undoubtedly,  even  Russian  statis- 
tics do  not  cover  the  entire  amount  of  cotton  coming  originally 
from  the  United  States. 

Machinery  and  technical  supplies  held  second  place  in  the 
United  States'  export  to  Russia.  And  here  special  mention 
must  be  given  to  agricultural  machinery  and  implements. 
During  1901-1905,  according  to  Russian  statistics,  the  United 
States'  entire  export  of  machinery  to  Russia  amounted  to  3.23 
million  dollars,  yearly  average.  Of  this,  2.73  million  dollars 
covered  the  United  States'  export  of  agricultural  machinery 
and  implements.  Reports  for  the  period  1906-1910  give  4.94 
million  dollars  as  the  entire  machinery  export,  of  which  4.43 
million  dollars  covers  the  export  of  United  States  agricultural 
machinery  and  implements  to  Russia. 

It  is  interesting  to  note  that  in  the  United  States  statistics 
relating  to  the  export  of  agricultural  machinery  and  imple- 


Economic  Future  of  Russia  ^  21 

ments  to  Russia,  larger  figures  are  given  than  those  above. 
Reports  on  this  side  give  3  million  dollars  as  the  annual 
average  for  the  period  1901-1905,  as  against  the  2.73  million 
dollars  quoted  by  the  Russian  reports.  Corresponding  figures 
for  the  period  1906-1910  are  5.17  million  dollars,  according  to 
American  statistics,  and  4.43  million  dollars,  according  to 
Russian  reports.  For  1913  there  is  5.31  million  dollars,  accord- 
ing to  the  United  States  statistics,  and  4.7  million  dollars, 
according  to  Russian  reports.  It  is  natural  to  expect  the 
Russian  figures  to  be  higher  than  the  American,  because  the 
Russian  estimate  is  a  combined  estimate  of  the  price  in  the 
American  port  plus  freight,  insurance,  loading  expenses,  and 
even  often  including  the  profit  of  the  West  European  middle- 
man. The  report  of  the  Russian  Ministry  of  Finance  explains 
the  situation  very  clearly.  "Part  of  the  American  machinery/' 
says  the  report,  "after  being  reloaded  in  Germany,  England 
or  Denmark,  is  registered  in  our  statistics  as  coming  from 
these  countries  and  not  from  the  United  States." 

The  same  may  be  said  about  copper,  which  held  third  place 
among  the  goods  imported  in  Russia  from  the  United  States. 
According  to  Russian  statistics  the  United  States  copper 
imported  averaged  yearly  8.88  million  pounds  during  1901- 
1910.  On  the  other  hand,  according  to  the  United  States 
statistics,  the  amount  was  18.52  million  pounds.  It  is  evident 
that  the  amount  of  United  States  copper  that  entered  Russia, 
according  to  American  statistics,  was  more  than  double  the 
amount  given  in  Russian  reports.  The  Russian  Ministry  of 
Finance  gives  again  a  very  definite  explanation  of  the  situa- 
tion. "We  receive  United  States  copper,"  says  the  report, 
"through  Germany's  and  Great  Britain's  hands." 

A  remarkable  discrepancy  occurs  further  in  the  statistics 
relating  to  United  States  flour  imported  in  Russia.  According 
to  Russian  statistics,  the  yearly  average  import  of  United 
States  flour  of  every  kind,  excluding  potato  flour,  during  the 
period  1906-1910  amounted  to  15.7  million  pounds.  On  the 
other  hand,  according  to  United  States  statistics,  the  yearly 
average  export  to  Russia  of  only  wheat  flour  for  the  same 
period  amounted  to  75.81  million  pounds.  The  flour  was 
-exported  mostly  to  Finland,  and  because  of  the  lack  of  direct 


22  Americas  Possible  Share  in  the 

connections  with  the  United  States,  it  was  registered  in  Fin- 
land as  brought  from  Germany.  This  fact  has  been  mentioned 
more  than  once,  even  in  the  German  official  reports. 

The  following  table  shows  the  growth  of  the  United  States' 
export  to  Russia  before  the  war,  according  to  United  States 
statistics : 

United  States  Average  Yearly  Export  to  Russia. 

(In  Thousands  of  Dollars.) 

1891-95        1896-1900        1901-05  1906-10  1911-13 

Cotton   (raw)   4,811.0  3,006.0  5,909.0  5,478.0  5,685.5 

Agricultural  machinery 

and  implements  323.4  684.4  3,000.0  5,178.0  7,729.7 

Copper  (unmanu- 
factured - _ - 822.0  1,632.0  1,112.0  1,322.7 

Wheat  flour  _       136.0  395.0  773.0  1,895.0  *3,360.0 

Leather  (prepared)  1.3  1.8  162.0  fl.075.3 

Machine  oil  and  paraffin           1.8  9.1  71.1  151.2  f232.8 

Rosin   241.0  285.0  275.0  320.0  737.0 

Typewriters   126.1  172.7  367.8  846.9 

Cash  registers  26.0  124.0  f249.4 

Sewing  machines 28.1  36.3  232.0  f768.3 

Scales  of  every  kind 29.4  70.5  54.0  57.0  f58.6 

Twine,  cord,  etc 11.7  28.5  299.9  753.0  1,646.4 

•This  is  the  figure  for  1911.     No  figures  are  given  for  1912  or  1913. 
tFigures  for  1913. 

The  figures  just  quoted,  together  with  the  figures  quoted 
previously  regarding  Russia's  export  to  the  United  States, 
show  quite  clearly  along  what  lines  the  American-Russian 
trade  rapprochement  had  begun  to  develop  before  the  war. 
Russia  supplied  and  will  supply  this  country  with  raw  ma- 
terials of  the  highest  quality.  The  amount  of  Russian  raw 
materials  brought  to  this  country  was  much  greater  than  that 
shown  in  Russian  or  even  United  States  statistics.  By  creat- 
ing direct  connections  with  Rsssia,  by  careful  study  of 
the  conditions  of  the  Russian  market,  by  an  active  trade 
policy,  the  amount  of  raw  materials  brought  to  the  United 
States  from  Russia  can  be  multiplied  many  times  to  the  benefit 
of  both  countries. 

On  the  other  hand,  the  United  States  supplied  and  will 
supply  Russia  with  all  kinds  of  machinery,  with  all  kinds  of 
products  that  presuppose  a  highly-developed  industrial  cul- 
ture.*    By  a  proper  and  active  policy,  the  United  States  can 


*The  possibilities  and  prospects   connected   with   the   export  to    Russia  of  foodstuffs 
.'.no  raw  materials,  such  as  cotton,  metallic  ore,  etc.,  must  be  discussed  separately. 


Economic  Future  of  Russia  23 

not  only  develop  that  line  of  her  trade  with  Russia  that 
showed  a  natural  tendency  to  develop  before  the  war,  but 
even  introduce  into  the  Russian  market  some  lines  of  mer- 
chandise never  before  brought  into  Russia  from  the  United 
States. 

It  is  well  known  that  befofe  the  war  Germany  almost  mon- 
opolized the  Russian  market.  If  we  compare  Russia's  trade 
with  Germany,  and,  for  instance,  with  Great  Britain,  we  see 
that  from  1870  through  1913  Germany's  export  to  Russia 
increased  from  39.5%  to  52.6%. f  Germany's  export  to  Russia 
in  1913  amounted  to  $332,622,000— $246,300,000  more  than  in 
1870.  In  the  meantime  England's  export  to  Russia  decreased 
from  31%  to   13.8%. 

The  same  is  true  of  Russia's  export  to  both  countries.  Dur- 
ing these  43  years  Russia's  export  to  Germany  increased  from 
21.1%  to  31.8%.  At  the  end  of  this  period  Russia's  export  to 
Germany  had  increased  $176,100,000.  During  the  same  time 
Russia's  export  to  England  dropped  from  47.2%  to  18.8%. 

A  great  part  of  Germany's  success  in  Russia  was  due  to  the 
Russian-German  Commercial  Treaty  existing  before  the  war. 
This  treaty  favored  German  interests  to  such  a  degree  that 
before  the  war,  in  Russian  economic  literature,  the  question 
was  raised:  "Should  Russia  be  Germany's  colony  any  longer?" 
But  the  Russian-German  Commercial  Treaty  was  only  one  of 
the  conditions  that  made  for  Germany's  success  in  dealing 
with  Russia.  The  immediate  reason  for  Germany's  success 
was  her  wonderful  method  in  trading. 

English  goods  imported  in  Russia  were  always  of  better 
quality  than  German  goods,  but  the  English  never  considered 
the  comparatively  low  buying  power  of  the  Russian  popula- 
tion. English  goods  were  always  higher-priced  and  did  not 
present  as  great  variety  and  novelty  as  the  German  product. 

In  dealing  with  Russia  the  English  almost  never  sold  on 
credit.  All  contracts  with  Russian  houses  were  closed  with 
the  condition  f .  o.  b.  English  port.  That  was  somethings  that 
went  against  all  the  customs  of  the  Russian  market.  The 
largest  and  most  reliable  Russian  houses  availed  themselves  of 


tThese  and  the  following  figures  are  taken  with  reference  to  the   entire  amount  of 
Russia's   export   or  import. 


24  Americas  Possible  Share  in  the 

the  credit  system  very  largely  in  buying  goods.  To  ask  them 
for  payment,  as  the  English  did,  about  a  month  and  a  half  or 
two  months  before  seeing  the  goods,  was  surely  fatal  for 
English  trade  with  Russia. 

The  Germans  did  the  opposite.  There  was  almost  no  dif- 
ference to  a  Russian  dealing  with  a  German  or  dealing  with 
one  of  his  own  countrymen.  German  salesmen  spoke  Russian 
fluently,  presented  buyers  with  catalogues  printed  in  Russian, 
with  goods  marked  according  to  the  Russian  system  of  meas- 
uring, with  prices  marked  in  rubles  and  kopeks.  In  addition 
to  this,  they  gave  Russian  houses  large  and  long-time  credit. 
All  this  built  German  success  in  trade  with  Russia. 

Even  during  the  war  Germany  endeavored  to  keep  up 
her  trade  with  Russia  through  neutral  European  countries. 
The  Swedish  electric  industry  was  successful  in  developing  an 
important  market  in  Russia.  According  to  the  correspondent 
of  the  "Torgovo-Promyshlennaya  Gazetta,"  in  the  issue  of 
February  17,  1916,  the  Germans  had  opened  a  large  electric 
plant  in  one  of  the  Swedish  cities.  By  using  a  Swedish  name 
this  German  plant  sold  its  own  products  in  Russia. 

The  same  correspondent  reported  that  many  German  indus- 
trial products  were  sold  from  Sweden  to  Russia  in  masquerade 
form.  German  pencils  (Johann-Faver)  were  sold  in  Russia 
with  various  French,  English,  Swedish  and  Danish  markings, 
and  these  markings  breathed  a  real  national  spirit.  The 
Danish  mark,  for  instance,  was  Heimdal — the  name  of  the 
famous  Danish  hero.  In  the  same  manner  were  other  goods 
sold  in  Russia.  Perhaps  the  most  interesting  illustration  is 
the  method  employed  by  a  German  firm  for  selling  German 
razors  in  Russia.  The  razors  were  wrapped  in  a  paper  bearing 
an  English  name,  and  the  razor  itself  was  marked  "Mussel 
Razor  Works,"  followed  by  the  Russian  words  meaning  "To  a 
Brave  Russian  Soldier  for  Distinguished  Service."  These  Ger- 
man razors  were  sold  in  large  quantities  in  Russia,  to  every- 
body who  desired  to  send  a  gift  to  a  friend  at  the  front. 

All  this  is  now  a  matter  of  the  past,  and  the  world  is  looking 
forward  to  the  epoch  of  durable,  if  not  permanent  peace. 
Peace  in  Europe  and  throughout  the  world  is  impossible  with- 


Economic  Future  of  Russia  f         25 

out  peace  in  Russia,  and  that  means  that  sooner  or  later  the 
world's  democracies  will  turn  against  the  Bolshevist  menace 
as  they  have  previously  turned  against  the  menace  of  German 
militarism. 

As  soon  as  normal  conditions  are  reestablished  in  Russia, 
and  Europe  comes  to  peace,  a  feverish  upbuilding  movement 
will  start  all  over  Europe,  and  Russia  will  lead  this  movement. 
She  will  build  railroads,  highways,  develop  her  natural  re- 
sources, build  up  industries  and  trade,  which  will  bring  her 
to  the  foremost  ranks  of  the  civilized  nations.  The  United 
States  is  designated  by  history  to  participate  in  this  upbuild- 
ing of  the  young  democratic  nation.  Every  business  man  in 
this  country  should  be  prepared  for  his  future  activities  in 
Russia,  so  that  the  two  sister  democracies  may  be  fully  bene- 
fited by  this  possible  and,  under  the  circumstances,  necessary 
cooperation. 


JUST    PUBLISHED,    THIRD    EDITION 

The  Birth  of  the 
Russian  Democracy 

By 

A.  J.  SACK 

Director  of  the  Russian  Information  Bureau 
in  the  United  States 


42  Full  Page,  154  Text  Illustrations 
636  Pages,  $3.75  net 

"Beyond  question  the  most  authoritative  work  that  has  yet 
appeared  on  the  development  and  present  condition  of  the 
Russian  upheaval  is  Mr.  A.  J.  Sack's  large  volume  on  "The 
Birth  of  the  Russian  Democracy."  His  work  brings  the 
account  of  revolutionary  developments  up  to  date,  and  the 
narrative  is  remarkably  accurate  and  comprehensive." — The 
New  York  Times. 

"Mr.  Sack's  book,  'The  Birth  of  the  Russian  Democracy/ 
gives  a  full  and  consecutive  account  of  the  Revolutionary 
Movement  in  Russia.  No  fuller  or  better  account,  probably, 
is  to  be  found  in  the  English  language  of  the  ideas,  the  men, 
and  the  events  that  finally  brought  about  the  overthrow  of 
the  Czar's  Government." — George  Kennan,  in  The  Outlook. 

"Mr.  Sack's  volume  of  636  pages  is  a  reliable  compendium 
of  the  history  of  the  revolutionary  movement  in  Russia  from 
the  time  of  the  famous  Decabrist  Conspiracy  in  1825  down 
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sary for  anyone  who  would  wish  to  understand  fairly  well  the 
actual  conditions  in  Russia.  The  book  is  extremely  valuable." 
— The  Boston  Evening  Transcript. 

"Mr.  Sack's  book  is  a  perfect  mine  of  information  concern- 
ing that  extraordinary  and  important  movement  in  Russia 
which  has  had  such  enormous  consequences.  It  is  a  pleasure 
to  have  at  hand  such  an  authoritative  and  well  documented 
account." — Herbert  Hoover,  U.  S.  Food  Administrator. 


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The  Russian  Democracy  in 

its  Struggle  Against  the 

Bolshevist  Tyranny 

By 

VLADIMIR   I.   LEBEDEFF 

Former  Secretary  of  Navy  in  the  Russian  Provisional 

Government  and  one  of  the  leading  members 

of  the   Party   of  Socialists-Revolutionists 

"One  of  the  most  interesting  and  instructive  documents 
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with  regard  to  the  Bolsheviki  and  the  attitude  of  the  Russian 
people  towards  them." — George  Kennan,  in  The  Outlook,  of 
February  5th,  1919. 

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A  Message 
to  the  American  People 

By 
CATHERINE  BRESHKOVSKY 

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mother of  the  Russian  Revolution."  An  expressive  presenta- 
tion of  the  tragedy  of  Russia  and  a  plea  to  save  the  young 
democracy  struggling  for  life. 

Introduction  by  George  Kennan 

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America's  Opportunity  for 

Trade  and  Investment 

in  Russia 

By 
DR.  JOSEPH  M.  GOLDSTEIN 

Professor  of  Political  Economy  at  the  Moscow 

High  Institute  of  Commerce  and  Industry 

and  of  the  University  of  Moscow 

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